The ingredients of a healthy entrepreneurial ecosystem

The digital technology-related sector is exploding on a global scale, surpassing most other business segments over the past two decades and this development is steady and continuous. And the digital industry turns out to be the most important growth sector for startups.

It turns out that more than half of startups capital in the world are associated with four categories!

In order to understand what makes startup revolutions possible, people focus on numbers. They should instead focus on the quality of life and unique specifics that each city can bring to a startup. Below we take a peek behind the scenes. We’ll search in depth to understand what makes each startup ecosystem so special.

The rise of the entrepreneurial communities around the world

The best cities for startups are complex and multi-dimensional. As business dynamics represent a constant flux, the ratings below are approximated instead of fixed. Every city has the right to become a part of the global startup revolution and reap the benefits of job creation, innovation, and economic growth.

Below Valuer explains the vibrancy of the cities mentioned, what can be done to sustain the uniqueness of the existing ecosystem, and what makes them the best cities for entrepreneurs.

Cape Town aims to be Africa’s technology hub with Silicon Cape continuing ‘to promote and grow Cape Town’s tech startup community’ and to represent the idea of startups in South Africa and the community.

The biggest obstacle to the startup ecosystem today is mostly regulatory, such as Exchange Control regulations that affect investment and venture capital.

Cape Town offers a number of co-working spaces such as a Wi-Fi lounge on top of Table Mountain where entrepreneurs meet and work on Tuesday’s for free.

Cape Town’s unparalleled diversity, infrastructure‚ world-class universities, and vibrant environment have given the region a competitive edge to reach beyond other startup ecosystems on the continent.

It is a city of abundance, with beautiful rolling hills in the distance, fashionistas and finance giants roaming the streets. But there still remain barriers stopping this wonderful city from topping the list. Young entrepreneurs are finding it increasingly difficult to grow their ventures.

How can Italy improve its startup scene? Easy.

First of all, learn from Israel – create a more open and sharing community, focus on building success stories so entrepreneurs and investors recognize their economic potential.

You may associate the country with cocaine and Pablo Escobar, but Columbia has become an attractive place for budding entrepreneurs.

The city is not just attracting local talent, but also startups from around the globe as it boasts the largest community for entrepreneurs in Columbia.

The government policies make it possible, attracting business owners with initiatives like the 175% reduction in tax for companies researching innovation. Although one setback is the rent. Compared to its neighbor Medellin, the average cost of living is around 30% higher.

Sao Paulo is so large that it could be a country in itself. With a population of 12.11 million, it is no wonder that the city has become the most mature startup capital in Brazil.

It’s home to a plethora of co-working spaces and accelerator programs, housing some of the brightest startups in the country. The majority of these innovative and agile startups started their humble beginnings in “San Pedro Valley”, the Latin American take on “Silicon Valley”.

But what makes them so vastly successful as a startup ecosystem? The young population. The city is home to an impressive collection of top-tier universities which of course attracts brilliant young minds who are eager to work.

But the city does not come without problems. Public transport is less than perfect and pollution is a problem, but they are working to improve that by introducing the city’s main avenue on Sundays as a drive-free zone.

This beautiful city with an intriguing history is a major startup hub. It is a top city for tech startups in Europe, especially due to its strategic location on the river Danube which is a major trade route for Europe, and the wide range of educational institutes.

The government has recognized its rising popularity with young companies, introducing a monitoring program, and funding local incubators and startups. But the success of these programmes are debated as entrepreneurs have abused the funding and instead created incubators close to the capital, but work outside of the city.

Budapest has appeal, but the problems are apparent and with a lack of proper mentorship, entrepreneurs are left to figure out the startup landscape for themselves. But the capital is still flowing with investment from the government. Some entrepreneurs are quite wary of this and instead search for private funding.

Belgium is home to a dynamic and quickly developing startup scene. The capital city Brussels houses not just the EU Parliament, EU Commission and NATO, it’s a booming hub for entrepreneurs. It’s the center of European politics and for European businesses, this provides an excellent opportunity, especially for startups.

It’s proximity to entrepreneurial hubs in Germany, France, the Netherlands, and the UK also make Brussels a favorable location for entrepreneurs. R&D incentives are common in the capital, but for many, the average cost of living is simply too high. But this doesn’t stop tech entrepreneurs from sharing accommodation.

With over 357 startups, the startup ecosystem in Lyon is starting to emerge. It has become a popular destination for seed stage startups finding their feet with bustling research centers, incubators, and accelerators.

And while the salaries are lower, so is the cost of living. Entrepreneurs are beginning to enjoy the less hectic environment of Lyon compared to Paris. It is considered as one of the top cities for innovation in Europe and brings business in life sciences, cleantech, digital and smart cities.

Not only does the city boast an incredible transportation infrastructure, but the digital infrastructure is also enviable. The city also has opportunities for mentorship and managerial assistance and great educational institutes, around 40 to be exact.

Supported by the local government, Lisbon has become a heaven for startups, with accelerators and incubators scattered over the city.

It is in part helped by Web Summit moving to Lisbon, which was previously held in Dublin, and by creating a national network of tech hubs and new companies in Lisbon through the StartUP Voucher initiative that gives more than 400 entrepreneurs a one-year fellowship to pursue their ventures.

Today Lisbon scores high on access to talent, affordable housing, and adequate public transportation. Should we mention the gorgeous weather?

Los Angeles is its own startup beast with over 6,000 starting businesses. Venture capital is readily available, businesses have a lot of freedom, and the education is exceptional but also incredibly expensive.

There is no doubt that this city is a popular destination for startups and job seekers. If you are a Software Engineer, you would be enticed by the median salary of $87,700! Get overwhelmed by the masses of exciting startups flooding the startup scene in LA.

Although Berlin is the unarguable center of the German startup ecosystem, there is another underdog of the German startup ecosystem.

It is a training ground for entrepreneurs with its vast number of corporate headquarters in the finance industry. Still, when it comes to the number of local Venture Capitals, Angels and Investors, startups in Frankfurt are facing difficult times while trying to find funding.

Even so, here entrepreneurs can find excellent conditions. And it is home to a growing number of expats, making it a friendly place for internationals. You’ll also find a number of prestigious universities, like the University of Mainz.

Oslo’s fast development is no coincidence and it didn’t happen overnight. It is the fastest growing Nordic country in terms of investment, and Oslo is leading the way. It is one of the best places for startups.

The startup revolution was recognized by the local government about 10 years ago and is heavily supported, especially during the last five years, through collaboration and cooperation.

The government has created an entrepreneurial haven with early-stage financing, education, and technical support.

South Koreas startup scene is solid and it is continuing to develop. More than half a billion dollars a year goes towards subsidizing startups.

FinTech and IoT are key research and development territories for Korea, and it is becoming a tech hub for entrepreneurs.

Especially relevant is the increasing number of young Koreans who are starting to become interested in startups. But there are issues.

The startup culture is still not developed as industry high-ranking jobs are associated with honor, rather than starting your own business. And large corporates are not fully embracing mergers and acquisitions with startups.

The pool of talent in Vienna is incredible, with one-tenth of the population being made up of students. They are also quite an international bunch with around 30 percent of the student population coming from abroad.

There are also plenty of networking opportunities and over the last 12 months, there have been close to 330 startup events and meetups. And while the number of startups (290 -/+) is small in comparison to others in this list, it is definitely a city to keep an eye on.

Shanghai is fast becoming every entrepreneur’s dream. Although it may sound crazy, the government is prepared to reimburse VC firms for losses they may encounter from startups that they have invested in.

The Shanghai startup ecosystem has a rapid growth during the last few years and became a hub for lifestyle tech startups.

The locals are a nation of early adopters utilizing technology and cultural change. The business landscape is hard working and highly competitive, especially for early-stage startups. Long work hours and a focus on results are a standard for this city.

The Santiago startup environment is accepting of failure, and they have adopted this attitude as a way to learn and grow.

The Chilean ecosystem has been dubbed “Chilecon Valley”, but don’t be fooled by the name. It’s estimated that around 90% of the startups are housed in the country capital, Santiago.

What made them so successful? The wealth primarily comes from the copper and mineral mines. But they are making a name for themselves in the technology sector.

Thanks to the adoption of the modern values of collaboration, they are booming. Equity free funding, cheap accommodation, and free coworking spaces are just some of the traits that have made this place so attractive for startups.

Istanbul has a very unique location. Nestled in between the European and Asian continents, the Turkish capital is an attractive location for starting a business. If you’re strapped for cash like the majority of entrepreneurs then you will find very reasonable and affordable housing.

The city draws talent from around the globe as foreign entrepreneurs are able to start their own private company. They also have favorable FDI laws meaning that foreign investors have the same investment rights as local investors.

New York is home to many unicorns (Vice Media, Buzzfeed), and startups that have exited the market. This, in part, is attributed to the ever increasing and present VC investments.

It is both a cultural, financial and media hub making it an all-around gem for businesses no matter the size or maturity. This also means that the city attracts talent from across the globe.

And best of all, startups and corporations collaborate with one another. It is an ecosystem that is worlds apart from Silicon Valley. But one major downfall is the extraordinarily expensive housing market making it less than affordable for young entrepreneurs.

Here new businesses accomplish gigantic scale rapidly, in light of the fact that the residential market is around 22 million. That is almost four times the population of Denmark.

Yet, an expansive market alone does not imply that a place will turn into a startup hub. It is the mix of market size, combined with extreme consumer-adoption speed of all new services plus the entrepreneurial mindset and hunger for startups to scale.

Here, founders use talent from the two best Chinese colleges — Tsinghua and Peking. They are also considered as the largest entrepreneurial ecosystem in the world.

Technologically, the city is advanced and the country is the leader in Ai. Beijing alone made up for 36 percent of venture funding in China.

Poland is becoming a hotbed for great tech startups. Warsaw can be proud of its large startup community, but it is not united. The local startup ecosystem offers a ton of Eastern European development talent.

Local people are open and helpful, and the diversity in this city will leave you breathless. From architecture to people there is something for everyone. Shops working 24/7. Good public transport. Cheap cost of living. Competition for talent.

Polish law and local taxes could pose a problem for entrepreneurs along with the local currency.

Munich is experiencing constant growth. With its current population of 1.5 million, the city is expected to reach 1.8 million by 2030.

Increasing urbanization is changing people’s lives and confronting cities with a series of major challenges like networking, mobility, renewable energy, the power supply in general and the design of public spaces.

As a result, investor networks, business angels, venture capitalists, and infrastructure are blooming.

Toronto is building on its strengths. First of all, it offers a healthy and diverse society for multiple collaborative initiatives, and programs that support startups’ ability to commercialize, as well as a fantastic network.

Furthermore, smaller and medium-sized enterprises have been recognized as the building blocks of the Canadian economy.

Locals are altruistic and often make time to help entrepreneurs. And the city is continuing to build self-supporting networks with over 10 startup incubators, accelerators, and hubs. There are also special services provided for seed stage companies.

Furthermore, Austin scores higher than Silicon Valley in terms of the cost of doing business, a better microenvironment for startups’ success, excellent quality of life and safety, as well as a diverse and skilled labor force.

Recently Melbourne was named the technological capital of Australia. It has more shared office spaces than Sydney.

According to Medium “Just in the last several years, there has been a sixfold increase in accelerators and 900% growth in coworking spaces: there are now around 170 just in Victoria. As a result, there is one accelerator for every 41 tech startups in the region, and 15 coworking spaces for every 100 tech startups.”

Not all startups are tech related and still, the growth is in all sectors. People here share an innovative and entrepreneurial mindset.

Melbourne has an official long-term plan to attract and retain talent. Simply put here intellectual property can be easily commercialized.

Over 1/4 of the world’s unicorn startups originate from Silicon Valley. It’s the largest startup ecosystem globally and valued above $279 billion.

Last year alone, startups collected $26 billion in venture capital. Why are they not on the top then?

Although the research suggests that Silicon Valley sits on top in terms of salary and the entrepreneurial spirit, it scores low when it comes to living costs, safety, its ever-increasing housing market and a lower quality of life.

The Danish ecosystem is incredibly interconnected and if you are a startup in the city, there is no doubt that you’ll be on a first name basis with most of the founders in your area.

Businesses in Copenhagen are receiving fewer investments from business angels. But this is not necessarily a bad thing. The investments are getting bigger!

There is government support available to newly formed businesses too. The “Danish Startup Fund” uses government funds to loan, fund, and give VC financing to startups.

Workers receive high salaries too. But there are some changes that need to take place for the city to dominate. There’s limited access to early-stage funding, and it’s difficult for foreign talents to thrive professionally in Denmark.

It has been an intense decade for entrepreneurs in the area. It is odd considering that Boston is home to MIT, Harvard, and other prominent colleges, and have a long history of software engineering and innovation development.

Most of the startups in Boston are, in some way or another, tied to those institutions. This can be a blessing or a curse for many founders and investors in the area.

Consequently, the Boston startup ecosystem is trying to make a comeback but they have to overcome their key weakness – the absence of shared driving power.

They are different from Silicon Valley in regards to socializing and building networks along with focusing on communication and building trust. These differences change the macro dynamics within numerous organizations.

Formerly known as Bangalore, Bengaluru may seem like a surprising city to make the top five. But they are here for a reason. The city is filled with talent. It began its success by outsourcing local talent to foreign companies and has evolved to become a startup ecosystem.

Government initiatives have made this possible. They have incredibly affordable housing and have grown into a dynamic city that is growing at a phenomenal pace. They rank as the third largest startup ecosystem in the world and attract a lot of investment.

Helsinki’s startup ecosystem has it all: talented entrepreneurs, investors, hubs, accelerators, and key influencers, and there are lots of startups receiving early-stage funding.

They offer strong government support to newly formed business. The “Finnish Startup Permit” (formed in April 2018) is one such initiative that gives high potential entrepreneurs the opportunity to build a startup and integrate into the local ecosystem.

Tel Aviv is the business capital of Israel and it is considered the top entrepreneurial destination for innovation. Many US-based companies have moved their research offices to Tel Aviv because of their notorious pool of talent and renowned startups in technology.

It has aptly been named “the city that never sleeps”.

But there are cultural differences. The Israeli businessmen are fierce negotiators and taking risks is part of their culture. It is both highly appreciated and encouraged.

The city is a unique mixture of highly advanced startup ecosystems with the Mediterranean culture on the side. Everybody speaks perfect English and Wi-Fi is available everywhere. Many world-famous venture capitalists are located here. The cost of living is high but the food tastes great.

It is the best city for startups in the world! Is Berlin Europe’s new Silicon Valley? Berlin’s startup scene offers a few unique competitive advantages – diversity and inclusiveness.

Living costs are affordable with average office rent. The atmosphere is ideal for people with an entrepreneurial spirit. If you start a business in Berlin you’re likely to get support from investors, apply for government funds or meet the many inspiring people.

Long-term loans are at a reasonable fixed interest rate and there are repayment suspensions for the first 1-2 years. You don’t need a local passport or a fancy diploma – Berlin welcomes talent from everywhere. And with Brexit on the horizon, companies are moving their offices to Berlin over London.

Conclusion

Startups are innovation and job machines. The pioneers of this movement are numerous business visionaries. They don’t consider a 9 to 5 in a conventional organization as a feasible option.

They tend to produce generous incomes for those who have invested time, talent and trust in them.

In a digital world, geographic limits can’t compel entrepreneurs any longer. Today, new businesses in Australia can look for associates from Europe, America, Asia or Africa.

Today, the financial opportunities presented to startups are limitless. Growing worldwide is no longer an issue.

Companies like Valuer are bridging the gaps and help both founders and investors find their perfect match, by creating customized development roadmaps for each company and allowing them to capitalize on their core strengths.

One lesson for investors or entrepreneurs to learn, people are stronger together.

VALUER.AI

In order to achieve this, Valuer developed a platform that uses crowdsourcing and artificial intelligence to detect, predict, evaluate and select startups that are particularly relevant to large companies.